HomeMy WebLinkAboutOrd 25-4959 - Electric and Gas Franchise Fees - PUBLISH 08-14-25Ordinance No. 25-4959 Ordinance amending Title 12, Chapter 5, Franchise Fees to repeal the one percent (1%) franchise fee and enact a two percent (2%) franchise fee on the gross revenue derived from
the distribution, delivery, and retail sale of electricity and natural
gas by franchisees including MidAmerican Energy Company, or
other natural gas providers utilizing the distribution system of
MidAmerican, to customers within the current or future corporate
limits of the City of Iowa City, and to describe the purpose for the revenue collected. Whereas, Iowa City has current gas and electric franchises with MidAmerican Energy Company that reserve to the City the right to impose a franchise fee on the franchisee's gross revenue from the sale of electricity and natural gas; and Whereas, Iowa Code section 364.2(4)(f)(2) requires the City, prior to adopting a franchise fee rate ordinance, to prepare and publish a Revenue Purpose Statement specifying the purpose or purposes for which the revenue collected from the franchise fee will be expended; and
Whereas, by Ordinance No. 09-4374 the City Council adopted a 2% franchise fee to be effective April 1, 2010; and
Whereas, by Ordinance No. 10-4382 (codified at Sections 12-5-1 and 12-5-2 of the City Code) the City Council repealed the 2% franchise fee and imposed a 1% franchise fee to be effective June 1, 2010; and Whereas, the City’s current Revenue Purpose Statement for the franchise fees in Section 12-5-4 of the City Code is to utilize funds for inspecting, supervising, and otherwise regulating the MidAmerican Energy Company's gas and electric franchises, for public safety including the equipping of fire, police and emergency services, and for public infrastructure to support commercial and industrial economic development; and Whereas, the City Council’s Strategic Plan for Fiscal Years 2023-2028 updated December 2024 proposes considering alternative revenue sources including franchise fees to help achieve strategic plan goals; and
Whereas, the Strategic Plan includes a strategy to enhance mobility by expanding the access and convenience of environmentally friendly and regionally connected public transit; and
Whereas, increasing the franchise fee from 1% to 2% would allow the City to support mobility initiatives including but not limited to its fare-free Transit program; and
Whereas, expanding the scope of the City’s Revenue Purpose Statement to align with State Code allows the City to continue meeting City Council’s strategic priorities while
providing enhanced flexibility to do so; and Whereas, the City's franchise agreement with MidAmerican Energy requires 90 days’
notice of any franchise fee put into effect by the City; and Whereas, the Revenue Purpose Statement and notice of public hearing on this ordinance was published on June 10, 2025; and Whereas, it is in the best interest of the City of Iowa City to repeal said 1% franchise fee and adopt, in lieu thereof, a 2% franchise fee effective November 15, 2025. Now, therefore, be it resolved by the City Council of Iowa City, Iowa: Section I. Amendments. Title 12, Chapter 5, entitled "Franchise Fees" is hereby amended by repealing Sections 12-5-1 entitled "Electric Franchise Fee", 12-5-2 entitled "Gas Franchise Fee", and 12-5-4 “Revenue Purpose Statement”, and substituting the following sections in-lieu-thereof.
12-5-1 Electric Franchise Fee: Pursuant to section 12-1-16 of the City's franchise agreement with MidAmerican Energy
Company (hereinafter "company"), there is hereby imposed upon the company a franchise fee in an amount equal to two percent (2%) of the gross revenue of the company, minus uncollectible accounts, derived from the distribution, delivery and retail sale of electricity
by the company to customers within the current or future corporate limits of the City, commencing with gross revenue received on or after November 15, 2025. 12-5-2 Gas Franchise Fee: Pursuant to section 12-2-13 of the City's franchise agreement with company, there is hereby imposed upon the company a franchise fee in an amount equal to two percent (2%) of the gross revenue of the company, minus uncollectible accounts, derived from the distribution, delivery and retail sale of natural gas by the company or other natural gas providers utilizing the distribution system of the company, to customers within the current or future corporate limits of the City, commencing with gross revenue received on or after November 15, 2025.
12-5-4 Revenue Purchase Statement: The revenue collected from said franchise fees will be expended for any of the following
purposes: A. Inspecting, supervising and otherwise regulating the MidAmerican Energy Company's gas and electric franchises.
B. Property tax relief. C. The repair, remediation, restoration, cleanup, replacement, and improvement of existing public improvements and other publicly owned property, buildings, and facilities. D. Projects designed to prevent or mitigate future disasters. E. Energy conservation measures for low-income homeowners, low-income energy assistance programs, and weatherization programs. F. Public safety, including the equipping of fire, police, emergency services, sanitation, street, and civil defense departments.
G. The establishment, construction, reconstruction, repair, equipping, remodeling, and extension of public works, public utilities, and public transportation systems.
H. The construction, reconstruction, or repair of streets, highways, bridges, sidewalks, pedestrian underpasses and overpasses, street lighting fixtures, and public grounds, and the acquisition of real estate needed for such purposes.
I. Property tax abatements, building permit fee abatements, and abatement of other fees for property damaged by a disaster. J. Economic development activities and projects. K. Any other lawful purpose. Section II. Repealer. All ordinances and parts of ordinances in conflict with the provision of this Ordinance are hereby repealed. Section Ill. Severability. If any section, provision or part of the Ordinance shall be adjudged to be invalid or unconstitutional, such adjudication shall not affect the validity of the Ordinance as a whole or any section, provision or part thereof not adjudged invalid or unconstitutional. Section IV. Effective Date. This Ordinance shall be effective upon publication.
Passed and approved this 5th day of August 2025.
s/Bruce Teague, Mayor Attest:s/ Kellie Grace, City Clerk *Submitted to publish on 08/14/2025